(Toronto) A report from KPMG in Canada says investment in Canadian fintech companies plunged in the first half of the year as valuations fell to levels not seen since the start of the pandemic.
According to data compiled by PitchBook for KPMG in Canada, fintech investments in Canada, including venture capital, private equity and M&A activity, totaled US$353.7 million in 57 deals in Canada. during the first six months of 2023.
The result is down from a total of US$1.09 billion from 87 deals in the second half of 2022 and US$834.1 million from 109 deals in the first half of last year.
The report says the first half of 2023 was one of the weakest for valuations since the first half of 2020.
This aligns with the issues the global fintech market faced in the first half of the year. According to KPMG International’s latest semi-annual report, investments fell to US$52.4 billion in 2,153 deals from US$63.2 billion in 2,885 deals in the second half of 2022.
Geoff Rush, partner and national financial services industry leader at KPMG in Canada, says the drop in investment is a continuation of a downward trend that began last year.
“Investors remain very concerned about the state of the global economy, with fears of a recession, high inflation and interest rates continuing to weigh heavily on valuations, causing them to pause and reflect on their current investments and strategies,” Rush said in a press release.
“Geopolitical concerns and the failure of several banks in recent months are also influencing investor decisions. »
The report says that during the first quarter, Canadian fintech investments totaled US$297.3 million across 30 deals. That figure increased more than fivefold to $56.5 million across 27 deals in the second quarter, marking one of the weakest quarters for Canadian fintech valuations since the fall of 2016.
“While investment will continue to be weak in the second half of the year, we will likely see pockets of activity in areas such as blockchain, artificial intelligence and machine learning,” Rush said.
“There are a lot of financial services companies that are leaning significantly on technology and are looking to adopt more emerging technologies like generative AI, which should bode well for the fintech space in the short term. and long term. »
